Electronic Arts (NASDAQ:ERTS) may have a reputation for being a gaming powerhouse here in the United States, but recent events imply it's not so big in Japan. The company has confirmed that it's shutting down its game development studio centered on Japan (named, unsurprisingly, EA Japan).
It seems particularly noteworthy since Japan is significant in gaming. After all, Sony (NYSE:SNE), the creator of the PlayStation consoles, is a native of Japan, as is Nintendo (OTC BB: NTDOY.PK).
During its three years in existence, EA Japan completed only one game, Theme Park DS. There were two other games under development, Sim City DS and Dragon Zakura DS, which the company still plans to release as it shifts its Japanese focus to its EA Partners model. That means it now plans on working with external Japanese developers.
The company said it isn't backing off its plans to provide game titles in Japan; investors can only hope that this strategy means it will be able to crack the market with more success. Meanwhile, it's been noted that gaming titles that are hits here in the U.S. don't historically do well in Japan, particularly first-person shooter games, which certainly suggests it might be wise to tap third-party developers immersed in the culture.
If you do a little searching around the Web, you'll see there's lots of commentary about serious differences between games (and game development) in the U.S. vs. Japan. (In one interesting bit of recent news, though, Gears of War, for Microsoft's (NASDAQ:MSFT) Xbox 360, has shot into the top 10 in Japan, which some have considered a surprising turn of events, especially given that the Xbox wasn't so well received in that country.)
Of course, this kind of news may give EA investors one more thing to fret about. Digesting earnings news has already led some people to wonder if EA missed the boat when it came to developing games early enough for Nintendo's Wii, which has been proving itself extremely popular right out of the gate. Rival Activision (NASDAQ:ATVI) seems to have given itself much more of a head start when it came to focusing on the Wii, judging by tidings from its most recent quarterly earnings announcement.
Even so, Electronic Arts is still a leader, with its many titles for PlayStation and the Xbox, and the console upgrade cycle is gearing up toward full swing. That's a major catalyst, although some of the doubts flitting around these days probably have investors on edge.
When it comes to closing down EA Japan, though, there's an old saying that sometimes a good run is better than a bad stand. Perhaps this shift in strategy is the best way for EA to crack the culture clash.
For related Foolishness:
- Check out Activision's most recent earnings.
- Jeremy MacNealy took a look at Electronic Arts' conference call.
- Here are Electronic Arts' recent earnings tidings.
Electronic Arts and Activision are Motley Fool Stock Advisor recommendations. Microsoft is a Motley Fool Inside Value pick.
Alyce Lomax does not own shares of the companies mentioned. The Fool's disclosure policy is the undisputed master of Dig Dug.
